Sunday, May 15, 2011

Free Money? Not quite – close enough.

We all know there is no such thing as free money (even a lottery win or a donation are not free as they require buying a ticket or some marketing to attract the donor which costs money). So how would one go about trying to get almost free money that lasts?

Well one way is to ensure that a good proportion of the money that you earn is designated to going into two things one is savings and the other is investments. Save for a rainy day is a common saying however with everything that is happening in the world saving is not enough we all need to plant seeds that will grow over time and compliment the savings.

With investments you can be an armchair investor or an active investor that choice is up to each individual and their risk appetite. There are many ideas for investing unfortunately a lot of them require a lot of money to start with and some need you to practically have a degree on that subject! I have come across one market that is little known by the common individual which offers a wealth of benefits to its participants.

The market I was referring to is also very straightforward and that market is the Currency (Foreign Exchange or Forex) Market. This market is the largest in the world; it is not trading in any one place and it trades 24 hours a day from Monday morning in Australia or Japan to Friday evening in the USA. There are a lot of things that affect the currency markets. Regardless of these the markets are very simple to follow and one can profit from them as long as they follow a simple system, with the understanding that small manageable losses will have to be incurred to make large, long term, consistent profits.

Due to the constant market it is the most liquid as well, meaning there are a lot of participants so you are not limiting your opportunity by being involved like you would with stocks & shares. Access to the forex is now available to the individual and at very little investment cost, some firms will allow you to start trading with as little as 300 (£, $ or Euros). However, it is probably better to start somewhere near the 1,000 mark (and trade as if you had only 300). Also most firms do not charge a commission – so for your small investment and some trading you could get some free money (profits).

How is the profit made? Most firms work on the basis of 100:1 margin which means for every 1 (£, $ or Euro) you control 100! This poses a risk and a major benefit. If the price moved 1% on the day you will be making or losing the face value of the trade! Here is the good bit – you can limit the downside by using stop losses – you predetermine the level by how much money you are willing to lose if your decision should be wrong. You can even use this technique to protect your profits.

Forex trading is very simple if you understand the very basics. Should you wish to learn techniques and ideas there are courses available showing you how you too can invest actively to get an extraordinary return, over time this will provide for that rainy day with ease; let’s not forget that it is commission free with most firms and with a small amount of initial investment capital you too can make your almost free money!